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tv   Key Capitol Hill Hearings  CSPAN  March 18, 2014 12:00pm-2:01pm EDT

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[inaudible] >> the greatest goal i think we should have for spectrum ownership is a liquid market. a vibrant secondary market where we don't have the one off, one shot opportunity to sell you spectrum. that gives everyone an opportunity to pollute or come together and say this is her one chance. we don't want to participate or we are only going to participate with something from agreement if we get this amount of money out of the process. we should be thinking about how to transition to a more liquid secondary market for spectrum. i'm going to also add another component to the spectrum discussion that they don't think is on many folks in our areas radar screen yet, which is millimeter wave spectrum. this is even higher frequency spectrum which is being used to also to from the great stuff at that engine and research and develop space right now. it may not be very well suited
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to mobile wireless, but for fixed wireless you could be talking about 10 to 100 megabits connection over multi-kilometer distances, very easily in the next couple of years. >> do you have a paper we could understand that you could cite for us? >> i've written about this informally in a free state foundation perspective piece. >> i'll be looking it up. >> i might be doing future work in this area. the research and development in this area, the next generation of technology wireless really is incredibly powerful. and i think it has potential to reshape the landscape in ways that hopefully the regulars won't mess up. but ways that will be very, very powerful. >> so, my thoughts to sure my boss has taken a position on special caps i don't want to get out in front of him, but i think it's interesting to look at spectrum caps versus spectrum screens from a perspective of
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flexibility and certainty. i find it really interesting that people complained about screen not offering the type of certainty they need for pushing the fcc, so and so forth, by the same time wanting to type of flexibility that a spectrum cap otherwise wouldn't be able to provide. and then on the auctions, you know, i'm one of the people that's very cautiously optimistic about incentive auction by being by person basis, constructive legislation -- [inaudible] so that we can meet the revenue requirement and we can also making sure that spectrum is becoming available, and we don't have to wait for the outcome of
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the auction to take place before can actually get spectrum to use. the ever that by person basis is constructed in terms of -- and making sure that becomes available for the auctioning of the aws band i think is a good symbol, to make sure that the quality from high court spectrum is put to use. >> so, in the tall spectrum ecosystem, one of the things james assey said a minute ago, he talked about the unlicensed economy. so licensed versus unlicensed, and, obviously, there's been an increasing push to make available more unlicensed spectrum. so i would love for us to quickly touch on that, those of you all who would like to come and if you don't want to in we will just move on. to give you and we'll talk about mergers next. if you don't want to duc type bt this issue, you can be thinking about mergers.
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okay. >> -- i think unhealthy. people go onto the captain everything should be licensed under the people say everything should be unlicensed. i think there's probably room for the middle ground where most people realize with that benefits from both but very few people putting analytical framework to understand how we should make those choices. one of the things we're doing at my center, we are drawing on the expertise of age in school -- engineering school. i think we need some fresh thinking to start to talk about how to make those trade-offs and when there are benefits come from different approaches like unlicensed, we can both understand what the limits are to make sure that it does, in fact, at the same time hurt the benefit of the licensed spectrum that's been the foundation for much -- spent christmas up another good point, and that is
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that i didn't understand why we needed all these lawyers on our personal staff, that what we actually need was an economist and an engineer. and so this is precisely why we've got to change the conversation that we are not all talking amongst policy wonks and esteemed legal professors. but that we also have the people who can really tell us how this stuff works. i used to have the engineers at the fcc come in and say, well, which is spectrum should be used for what? let's redo the spectrum chart. we were like, oh, dear, she has so much to learn. anyway, ambassador to any of us? >> part of the complexity from the fcc's perspective is the secret service roles to make it much easier to hire lawyers than it is to hire engineers or economists. i think everybody at the fcc would agree that we would like to see that balance shifted, but it turns out to be rather difficult as a result of the prevailing rules.
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as an unlicensed and i'm rather hopeful we will see some activity in the 500 megahertz range. >> i think we should bring some sociologists to stuff. we've argued when it comes to licensing the lesson, i chose subcommittee on unlicensed section use of the fcc's diversity committee and this is the challenge for us because we know that there are points we need access in underserved neighborhoods but we know you can't do that without -- it's not going to work. we think we need to consider ways to sort of balance the approach that we can have, continuous coverage while at the same time respecting the rules. >> professor yoo, i think he wanted to add a comment? >> i agree in terms of their being licensed and unlicensed. we had that debate last summer
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from what is the role of licensed and unlicensed a look at reallocation to the middle class has spectrum there, plays out. that was part of the middle class act, mandating a look at whether that we can expand wi-fi access in the five gigahertz band. since the numbers are both aspirational, incentive auction has numbers that you can't set instant answers looking at it and choose see how the service is complete together. these numbers are soft but when you look at the potential recovered a licensed spectrum and the potential for expanding five gigahertz unlicensed in the middle class had more unlicensed options and license options. certainly my bosses agreed that was a good approach and something we should put in the bill. i think without speaking for shawn and his bosses i think we agree there is a role for both and both should move forward. >> from my law class i find it
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to those for spectrum policy for which i think deals with the question licensed and unlicensed spectrum better than anything, anything else i've run across. it points out as the other panelist mentioned there are benefits to both and to talk to when you want to one versus the other. the task force report recommend an exclusive use of more property rights model with regard to the beachfront spectrum because it's extremely scarce, in high demand, allow different entities that may want to use it and transaction costs are probably fairly low in transferring licenses. you need a good secondary market so that it's not just a one time allocation as gus suggested that he becomes a robust market that looks a lot like real possibly. for unlicensed spectrum it's much more useful in the upper band, laces where scarcity is lower because there's less of use over transaction cost might be higher. it makes it hard to use that mechanism but i look at the
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success of unlicensed and it reminds me, i don't know if it's -- summary was telling me in the old soviet union when all the agriculture is under command and control, the '70s was extremely with allowing people to privately form like part of, like maybe one-tenth or less of the total agricultural scheme and within five or six you centers reported large amount of all of the parties in the country was coming from these little tiny chunks because it's what you left expended. what doesn't work is the command and control didn't work for soviet agriculture is not working for traditional spectrum spent maybe you should call mr. putin. >> i'm going to build on dan's point. thank you for that. i've heard the same story. i don't know if that makes it not -- i've heard the same tale recounted as well. so one of the really interesting
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questions left unanswered in the spectrum policy task force report is what happens when unlicensed spectrum becomes congested? when there is a need to have it be run by single entity, to arguably hybridized? and that posted a really interesting question moving forward as, if we are to rely more heavily on unlicensed spectrum and we are juicy unlicensed spectrum being more substantial develop. >> these two mergers. spent quite possibly. that's a fascinating question, and i should also say i agree 100% with christopher and others, point that we shouldn't be a or b. we should be in the world that blends a and b. also agree, the importance of understanding the engineering perspective. one of the most important shifts over the last decade or so in
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this area is software to radio and the ability to put products out where they're not assigned to fix bans based upon the silicon designed to. >> and technology is ever-changing. >> exactly. so this means that you could today sell a cell phone that has a radio that can be tuned across a five gigahertz range, and then depending upon the geography where your operate in, depending upon the technology within that area you could use the appropriate frequency. you don't need to have three different cell phones for three different markets. markets. >> fundamental change in the nature of how we just spectrum. >> i wish is going to make one quick observation, which is we already facing an unlicensed spectrum crunch and that's why we're looking at five gigahertz and need to open up additional bans there so we can provide not
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only the sort of -- but relief congestion by expert expert alrt the two gigahertz. >> so many questions, so little time. before we leave, i really do want to hear from each of you all about should that be, it is the, it is the most anyone thinks they should at least be some updating done to the telecom act, what would be your dice on that? what are the chances that your boss is coming in, are going to advocate for a total, complete change of just some fixes along the way. and, of course, as i mentioned before, mmtc has been leading at the task force that former commissioners, i mean congressman starr and townsend are co-chairing. i think it's been very successful thus far and another
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making the rounds up on the hill, to. so, professor yoo. >> i think that we are witnessing something similar to what we saw that led up to the 84 cable act. nipped and tucked afford up to the point where we saw ancillary rulings being struck up and down by the court and eventually we decided if there's a different phenomena we need to do it. a true revelation is designed for technology. .com is a lot more consensus on what not to do than on what to do. everyone says let's get rid of silos, the content, which is to start a dialogue on how to fill the my prediction is i do think there's an emerging consensus to separate what is traditional economic revelation which much more competitive world, much less necessary and shift the dialogue to the filling certain social obligation, disaster recovery, images response to law enforcement, disabled access just to name a few, universal service, and look at these mechanisms and to country and
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new dialogue where we're moving past, replicate the world and started the more critically about how we store the province of emergency response. i think that's a very important dialogue that is just now starting to happen, thanks to the committee, thanks to the commission and a lot of other leadership among the companies represented on the last panel. >> i think it's fair to say is observable. that's a good thing it is serviceable because they tell us it's not terribly easy to amend it, let alone replace it. if we are thinking this is about doing it in the environment of rapidly changing technology, rapidly evolving business models, rapidly changing consumer behaviors, we probably need something that is pretty simple and provides an awful lot of discretion for regulators. to get this going to be very difficult to legislate on something that's very specific that will have a very long life.
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>> i agree, and since david is here and shawn, i think as we go through this as opposed to rewrite we need to make sure it's a flexible system because the processes of protocols we are seeing put in place are changing and they're changing very rapidly. who among us would have thought that our smart phones would be so smart and get even smarter day by day? and so i think we have to have an act that has some flexibility, a little bit of flexibility for these changing systems it i would like to say, and david has heard me say this, but i also think this is a great opportunity as will look at the updates for just for point. one is find ways to advance minority ownership. looking at the program can what i just spoke about with amending 30309 for further legislation ad
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this is an incredible time to do that right now. because we seen such an increase in minority engagement as consumers we should also see a wakeup and access to facilitate that type of expansion among others who want to be competitors in this ecosystem. i think also we have this great opportunity to look at the updates, to enhance first class dual citizenship it broadband adoption is still the problem, and it's not gone away. it may not be one of those big -- it is certain when the web to find ways that this act enables new innovations like health care, education, civic engagement in ways that we started the discussion. i get couple years back. we want to see an act that accommodate that growth rather than stifles that. i think we still need to protect universal service programs. they were fought for. we cannot let those be vulnerable in this update. lifeline linkup is one we need to really make sure gets preserved in these discussions. i think when you think of some
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of the laws that stifle build out in underserved communities. there's some clarification that needs just still happen in terms of authorizing such that we need to look at. this is a great opportunity i think as we look at where we're headed with this, that this can be a way to bring people together rather than polarized the discussion and sort of go back and we looked at where we were we are at a great time and advancement, so david, i put -- you our next. >> what we see play out is what mike chairman hope for. after spending the better part of three years working on issues for the fcc and then, we were frustrated actions when equipped and in a way we would like. chairman upton and waldin decent we should take a hard look at the act and work on updating. as randy noted on the last panel we did go to great lengths to say update and not rewrite because we are not sure what it
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will look like and that's why we're doing a years worth of hearings and white papers and stakeholder meeting today to what pieces of the act we would like to retain and which ones we would like to modify. the end result could be none at all of them, or anywhere in between. but we're trying not to prejudge what it should look like. we've gotten such great feedback from folks. we were overwhelmed by the response to the white paper, getting 115 responses to our first one which was essentially a look at the communications act. domestic companies, academics from europe weigh in as well which was surprising to us. we weren't expecting them to weigh in on our white paper. at the fact of the matter is as we look at this, the world is changing the as i sit here i have not had a landline for telephone since i left college, but i currently have three mobile wireless rock band devices on the, on the panel.
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clearly the world has changed in terms of how we approach communication at a couch and we're hoping to spend the next year and the next congress looking at how we can update the act to be flexible enough to deal with this really has changed part of our economy. but just to give the kind of certainty that consumers and businesses have come to expect. >> the three points really quickly. one i'm really worried about, arbitrage, things like google not offering voice services in kansas city it should be because the site is a not economic. not because they fear regulation will come one. secondly, i think the fcc needs to move away from public interest oriented standard and much more towards traditional antitrust standards but to the extent the fcc will be involved in economic relations, need to read this this is a very competitive market with. what is yo she looking for our areas where there are market failures and whether marketers
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are causing consumer harm. if those aren't the case, i'm not sure the fcc ought to do to get a lot of hits capital toward economic -- that's easy to dedicate more capital towards things like caching is the fcc is correct that 706 buil 706 a t as a problem company answer seems to mean to fund build out. things like connect america fund i've become much more useful dedication to the fcc in continuing on net neutrality rules. >> so i think i'm the crazy person on the panel. i help submit a couple of the comments to the committee, and one of the sets of comments was probably one of the more aggressive proposal he received, which argues that the fcc we need to be thinking long-term about rationalizing large portions of its functions with other agencies. the fcc's antitrust mission is largely duplicative with the
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ftc, the fcc chairs allow functions with ntia. and we've seen over the course of history, we ultimately dissolve those bodies and rationalize their functions with other agencies. i don't know that we need to dissolve the fcc but we should be thinking about finding redundancies can find a way to rationalize these functions with other entities, and particularly in the case of competition authority with the sec, particularly in the case of section 706. probably with the fcc data security, privacy. the fcc's current mission, they surveyed number of very important goals as social service and social functions, we discussed universal service. and these are all very important. there should be a body, could be the fcc that continues to focus on these, but we should disambiguate the antitrust and economic questions with the
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social program oriented questions, which is not to accentuate or diminish the import of either of them. one other point that i would like to make, thinking about the communications act update generally in the problems that we are addressing today, network neutrality, a of retransmission consent, many of the base in this era, basically about consumers being caught in a between content producers and distributors. this is a similar set of problems that we are seeing over and over and over. we are approaching them with different groups, different regulatory powers, different statutes. we should take a step back and try and think seriously, is there a holistic approach to addressing these problems? on these problems that we need to address as a whole, from a holistic approach? >> my last question actually is so interesting that you brought this up was, if you have a blank piece of paper and we started
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out with all of the functions, economic, societal, regulatory, where would those b be placed ad would they be a and fcc and what would it look like? so it is very interesting pashtun would have time for the shot i will let you have the final word and if they were going to have lunch. lunch. >> i was just going to make a quick observation, and it seems to me when talk about social services, social functions that sec should be able to play. the other ones are placing more of an emphasis, antitrust regulation to the extent that there's actual consumer harm as a result of specific market failure, then the fcc should be able to step into it and i think the fcc certainly has those social functions that cannot be executed from antitrust authority alone. and that's what we do have a -- my boss believes is important
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element of any kind of off and going forward. >> please me in thanking this terrific panel. [applause] >> okay. no one move. for just a minute. stay in place. and i want you to join me in thanking deborah tate, and still that move after that, but let's think of deborah. [applause] she always does a terrific job. i just want to exercise, i served as a moderator but i'm not the moderator of the panel, but sort of thinking of when ronald reagan said back in new hampshire when he was running for president, i paid for this mic and so i'm going to use it. i thought all of the panelists were great. i appreciate your being here. i want to especially thank ambassador verveer for coming over from the commission.
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i learned from the previous ambassador gross who is a good friend of mine that once an ambassador, always an ambassador. so that's why i had referred to him as ambassador for fear -- ambassador verveer. eni, we were at the fcc together, our times overlapped. i shouldn't do it myself but it was, i was there from 1978 to 1981. and i was just an associate general counsel, but during the time that i was there, ambassador verveer during that time, he was chief of the table bureau, when you just to the name of these bureaus you remind -- you know how much things have changed accused chief of the cable bureau and then chief of the broadcast bureau, and then chief of the common carrier
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bureau to none of which exist today which may tell you something, but just within that time he was chief of all three of those bureaus, which i thought was pretty amazing. so if i refer to him as chief rather than ambassador, you might, you might forgive me. but i'm glad that philip was here along with all of our panelists. i appreciate it. it was a great discussion, and thanks. so what we're going to do now, i see the doors have been opened and lunch is ready. we've got a wonderful lunch there for you. right over to the lunch and then we're going to start -- commissioner o'reilly is already here, and he's raring to go. so we're going to start after you get your lunch in about 20, 25 minutes, i'm going to start my conversation with
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commissioner o'reilly. i've got some questions lined up. if you have one you think is particularly great, you are welcome to feed it to me but we're going to get started with that right after lunch. so let's think this panel once more. -- thank this panel wants more. [applause] >> thanks, guys. [inaudible conversations] [inaudible conversations]
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[inaudible conversations] [inaudible conversations]
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>> while we wait for the conference to resume we will show you an interview from today's "washington journal" with jeff bennett come "wall street journal"'s automotive reporter on gm's recent recall. >> jeff bennett come to the audit industry for "the wall street journal" and he's joining us just outside of detroit on this tuesday morning. thanks for being with us. >> guest: thank you spent in this headline from "the wall street journal" is gm thinks $300 million into the recall. and eugene chief yesterday in a video statement had this to say about what it means for the company and its customers. ..
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in my last message i outlined the measures we are implementing to take care of our customers and to insure it does not happen again. since then, we mailed recall letters to affected owners on march 10th and 11th. we'll send a recall service bulletin to dealers the week of april 7th. thighs letters and bulletins will explain the issue and the process for getting the switches replaced. as soon as possible we'll also send follow-up letters to customers to let them know that parts are available. that should start the second week of april. in fact, we are adding a second
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production line at our supplier to allows to double parts availability. >> host: that assessment from general motors president and chief executive officer, jeff bennett. as you heard your comments yesterday and your reporting, recall totaling more than three million vehicles. is this enough? >> guest: you know what gm is doing here is really trying to get out in front and present kind of a new gm to consumers here. gm overall in the past had been known as kind of a lethargic, a slow company, slow to identify problems and so what you're seeing here is kind of this new emergeing leadership trying to present a better picture. and it seems like it could be connecting with consumers here. it is early yet but what you have here is mary barra stepping out, taking responsibility,
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saying that she is spearheading an effort to find out what went wrong and they are moving ahead to try and get a fix to consumers rather quickly. so i think it is connecting on some level. we just have to see now how well this recall goes for them. and that's going to be crucial. if you have a lot of consumers who roll into dealerships and there are no parts or the deal her doesn't know what is going on, and they're turned way that could spell trouble for them down the road. >> host: let's take a step back. these are vehicles on the road for what, the last 13 or 14 years. clearly people inside general motors knew that there was a problem with the ignition switch. what specifically was the problem and did gm respond appropriately during that timeline? >> guest: okay, so what happened was back in 2004 they were
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beginning ready to introduce what is the 2005 chevrolet cobalt. at that time there was an incident that was spotted where the car, when it was in motion the engine turn on would suddenly stall. some gm engineers, which gm has not yet identified kind of replicated this problem and what they found is that either when you jarred the ignition key while it was in the ignition, or you had too much weight on the ignition key, the key would actually slip from the on position to the accessory position. basically the middle section of your ignition switch. by doing that, it turned off the power to the airbags and to the steering, making the car much more difficult to manuever and it also caused it to stall. so what we know from gm's own chronology was that these engineers opened up a report into this, looked into the
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different solution that is were needed, came up with solutions but when it came time to deciding on whether or not they would go through with it, it was decided to just drop the whole thing because of cost and time needed to institute these new changes. so the report was closed, and in 2004 not much more was done. what we saw then happen is through the years this issue continued to pop up, kind of rotating through these kind of engineering reports. reports would come in from the dealers saying hey, we have consumers complain about this. gm would look into it. they would identify the problem but again, not watches done. the biggest step they took was to notify dealers, telling dealers, hey, if you have this problem, if consumers come in, reporting of stalling, tell them to take all the extra weight off of their ignition key and it
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should kind of solve the problem. so again, this rolled on really through 2011 when gm finally began to put an engineering task force in charge of really looking and examining this problem. however, again, nothing was done until really the late 2013 and in 2014 when the problem was presented to mary barra and her group and the recall was initiated in february. >> host: and this initial recall involved what, about a dozen deaths and more than 30 accidents related to that ignition switch? >> guest: that's right. they recalled about half of the number that, that the recall has since grown into. it has now become just on the ignition switch alone has become a 1.6 million recall worldwide or 1.3 million vehicles just in the u.s. but when they initially announced it, they did only
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about half of that. and that was in february, on february 13th, when they announced that recall. they then looked at other vehicles and through more investigation, then decided to expand that to include beyond the cobalt, other vehicles like the saturn ion, saturn sky, hhr. >> host: let me share with you. this is from the house and energy and commerce committee which is one of a number of congressional committees what happened with gm and they're clearly looking for information or document that is will further their investigation. as somebody who is following this story, what do you want to see? >> guest: really, we want to see what had happened. i mean you can only there arize, covering gm and the auto industry, as long as i have, you can theorize, was this problem bubbled up early on. this was back when automakers never wanted to screw up a launch. introduction of a vehicle, it's vital, it's critical.
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a lot of media is watching it. any slow, any delays get reverberated threw the media and and auto-makers concerned that a bad image is presented. so what we're trying to find out is, what happened? this report was opened in the engineering there was a problem. how far up did it go in the chain? we then know that, you know, really through 2004 through 2011 the issue kept bouncing back and forth but we think it was mostly the lower engineering division reporting going on but what is the case is that there is two things happened. in 2007 there was a meeting in washington, d.c. between national highway traffic safety administrators and gm. and at that time, they pointed out an accident that had happened and were questioning gm bit. so that happened in 2007. again, not watches done.
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in 2011, a committee was formed within gm to investigate the problem. an executive was put on that committee. we still don't know to this day how far up the chain the problem was reported and why really no action was taken, really until late 2013 after they had gone to the ceo with the information. >> host: this is a story this morning, front page of the "detroit free press." the headline, gm likely to avoid long-term damage. in fact, jeff bennett, gm's stock price is up 54 cents yesterday and wall street is expecting that the stock could climb to as high as $48 a share once they get through this recall effort. so will the company pay any price for all of this? >> guest: well, that is the big question. they did go through a bankruptcy in twine. and according to those bankruptcy proceedings any recall or lawsuits that are
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dealing with the company prior to the bankruptcy, you can only sue what's known in the industry as old gm. this kind of corporation that's in bankruptcy that has, to make payouts to different things. so that should cover up most of these, i guess, accidents or that are reported in lawsuits. there only has been a couple that have occurred after gm went bankrupt. now whether or not an attorney can go in there and say look, gm didn't disclose this. they knew that this problem was out there and they kept it from the bankruptcy court or they committed fraud, if perhaps something like that is made and that is accepted and an attorney is able to pull that through and make gm liable, then there is a different whole scenario that takes place but yeah, most of this cost could be absorbed by
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the old gm and because of that a lot of analysts are not seeing a kind of financial impact on the new gm. the biggest question that the new gm faces is really fine that is it could face from federal regulators. >> host: our phone lines are open. 202-585-3808 for democrats. we also welcome our listeners, joining oust on c-span radio heard coast to coast on xm channel 120. here in the baltimore, washington area, 90.1 fm. donna joins us from york, pennsylvania on the republican line with jeff bennett, joining us from outside of detroit in southfield, michigan. he writes for "the wall street journal." good morning, donna. >> caller: i have a 2007 chevy cobalt. i've been driving it for years. i have good luck with it. i keep that from my car.
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never had it stalled on me. so, you know, i just got my thing from gm for recall. so, i called them and as soon as the part comes in i'll take it in, have it repaired but as far as i'm concerned i never had trouble with my ignition at all. >> host: donna, did the notice come in email or come in the mail? how were you notified? >> caller: i got it in a letter. >> host: what specifically did it state? >> caller: it stated about the ignition. >> host: did you buy it new or buy it used? >> caller: i bought it used. i keep that for my cars, okay? one time i stopped it and couldn't get the keys out of it. so i took it to my, my son has a car lot. and his service and it was a shifter, instead of the ignition. but my car never stalled on me, never. >> host: donna, thanks for the
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call from york, pennsylvania. jeff bennett. >> guest: donna, i would still say, some of these cobalts haven't stalled. again it's not happening across a vast majority of these. it is just very spotty. but i would still follow through with the recall and take your switch in. again it's a free fix to you. and you might as well just do it out of a safety concern. you just don't want to run into this issue down the road sometime. >> host: let me summarize what are more than a dozen various tweets related to the bailout by the u.s. government towards gm. how much, if anything, did that play into the timing of this recall and the response both in the short and long-term, jeff bennett? >> guest: you know, this is a question we continue to get. you know, this, i know the country is very divided on this bailout of general motors and that but you got to understand that the bailout was the only thing that gm received was the
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money from that. they really didn't, the government didn't get into the day-to-day business and this is just a very business oriented problem from gm. and i really doubt that because they had received federal money they tried to hide this or were keeping it from lawmakers. they just wouldn't really put safety at risk to just get some bailout money here. this would make them look even worse. so i think again, this was just a problem. they did receive a bailout from the federal government and they are just continuing to deal with is really an internal issue for them. >> host: this is the headline from the money section of "usa today." as general motors adds three new recalls including the buick enclave. this twitter question, what is the definition of a recall? >> guest: the definition of a recall is that they are actually telling consumers that you have
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to bring your car into a dealership for a fix. now there's a variety of recalls and how they play out is also very, is varied. you can have something as simple as just fixing a part to something as dramatic you have to park your car, get it off the road. we have a lot of work to do on these vehicles. what we're seeing here, this that is really just a part fix. that they need to you bring in a vehicle that they will replace the ignition switch. and again, this is all a cost that is borne by the automaker. it is nothing that is put on the consumer. and, recalls again, you can have a voluntary recall, like gm did on this case. or you could have a mandatory recall, sometimes, when safety regulators come across a problem, they would force a company to recall either cars or
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baby seats or whatever products are out there. >> host: let me go back to your story from last week that this problem was first detected back in 2001, correct? >> guest: yeah. i mean what happened was gm put out a newer chronology about a week ago and in that they were kind of trying to be more transparent and they had said, you know, in 2001 there was some sort of ignition switch problem, not to the degree we see it now but there was something going on there and we corrected it. but in 2003 a consumer had come into a dealership saying hey, my ignition switch looks like it is worn out. and at that time a dealer had reported that there was too much weight on this key and causing the ignition switch to wear down. the switch was replaced. and not much more was said.
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however what really is the, i guess the focal point of everything is that in 2004, when a group of engineers noticed the stalling problem, noticed the ignition switch, opened a report, looked into it, but then closed the report without doing anything, that is where a lot of the attention is going to be. why did gm do that? why did they just close this report and not follow up? >> host: jeff bennett is on the automotive beat for "the wall street journal" he is joining us from south field, michigan. peter on the phone from reading, pennsylvania. good morning. >> caller: good morning. my girlfriend purchased, well, she is in the process of purchasing a 2006 chevy cobalt sedan with the power steering problems or freeze and, we took it to, she bought it used and we took it to the dealer and he tried to say that we, she was turning it too sharply.
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and it was the motors. but, is that involved with the recall at all? >> guest: if it is a 2006-2007 or even 2005 model year cobalt, yes, you are covered under the recall and you should take the vehicle in. again you should receive a letter stating that you have this problem. there is a group of letters going out right this week and then there will be some follow-up letters in april when dealers have parts notifying consumers, okay, now is the time. but yes, again, your car should be covered under this recall. >> host: as we talked about earlier the house energy and commerce committee among those looking at this and you have the story for "the wall street journal." congress investigating general motors into what happened. there is also a justice department investigation and the first civil lawsuit filed last week. so tie all of this together. who is questioning whom and will there be one single
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investigation or there will be a disparate group of house senate committees and the justice department? >> guest: you need a laundry list for this one. you have a house committee, you have a senate committee, both doing their own and separate investigations. you have the department of justice which is looking into things. then you have the national highway traffic safety administration, better known as nhtsa, doing its own investigation. in fact gm submit ad chronology of events to them. nhtsa came back to them and said, hey, we need about 107 of our questions answered on this. if nhtsa finds out that gm didn't comply with how it did its recall, gm could face a fine of at least $35 million. at the bottom line, you have gm's own internal investigation where they hired some lawyers to look into that. the ceo has promised an unvarnished report.
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that to look into alphas sets of how this problem happened. you have all of this going on. then separately what you will probably see is a lot of lawsuits propping up from people who had issues, who had been hurt. what we've seen is a couple of suits coming from different states like wisconsin where a two people were killed riding in a cobalt. then an interesting lawsuit that just happened last week is coming from canada where a canadian law firm is trying to sue gm canada for the recall that, the recalls happening there. it is interesting because gm canada, you could say technically didn't file bankruptcy. only gm filed bankruptcy in the u.s. court so it's kind of interesting to watch how that one may unfold. so a list of investigations and a list of lawsuits all going on
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at the same time, all separate. >> host: i realize you're a reporter, not a mechanic but your accompanying story last week, front page of "wall street journal" shows exactly what we're talking about the failed ignition switch. explain the photograph. what is the problem? it looks like a very simple piece. >> guest: it's a very simple piece. what has happened is, when you put your key in the ignition and turned it from off through what is the accessory position or the middle position on the switch to the on position, that is when the vehicle starts but, because of some, i guess, issues with the springs, when the ignition key is hit it would switch back into the accessory position. so what we see here is really what the manufacturer of these replacement switches is calling a 2 to $5 part that is causing the problem here and if they
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would have got in there and changed it sooner, you wonder if this issue would have become what it is now. again, yes, what you're really looking at is this kind of spring within the switch that doesn't, that too easily can be bumped back allowing the key to move. >> host: do you know who made this particular part that g used? where it came from? >> guest: yes. the supplier is delphi automotive. this is the supplier originally part of gm. gm kind --, gm was this company also making parts. so back in the '90s it put a lot of this part-making business into its own unit and spun it off into what is delphi automotive and delphi automotive plc was making the switches back then and has now been clarked with making the -- charged with making the replacement switches. it is the one that put on a second line to pump these
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switches out even faster. >> host: dave joining us from chicago. good morning. thanks very much for waiting. >> caller: good morning. thank you. i guess i have a comment here. i'm a certified master technician. instead of mechanics from the growth of the industry and basically we've seen a number of safety issues through the years. flashing back to the mid '80s. audi had some problems and out of those problems came shift locks where you have to actually put your foot on the brake, get the car out of park into drive, reverse or whatever. basically from lawsuits, incidents and accidents. one of the problems i see out in the field is that the manufacturers never come out to us and interview us directly on problems that we report to them. i guess maybe there's a big difference between guys that actually works on the cars and guys that build them.
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engineers versus technicians. this block in communication or the difficulty between the transfer of information between especially in safety-related issues is always dragged out. so you know, these problems are going to continue. wear and tear of engineers, probably do the best they can. most of the time, but feedback from the actual guys that work on the cars, horribly disconnected between the manufacturer and the guys actually out in the field. and i work for a dealer and we find tremendous amount of difficulties. we've even discussed this with the union, it's a union shop. found difficulties with our union guys communicating how to discern information to the manufacturer. so i'm sorry it is not really a question but it's basically a
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communication problem and, for engineering difficulties. thank you for taking my call. >> host: thanks for adding your voice and perspective to the conversation. we appreciate it. jeff bennett, any thoughts? >> guest: what's may ised me covering this industry is what he hit on is the vast amount of information that really goes uncollected by the automakers and whether it's a question there is just so much of it out there or they don't have resources to get that it's very interesting to see how they continue to wrestle with this problem not only internally between the layers that they have there, between engineers talking to designers, but just on how they collect and communicate with their dealers who really are on the front line, the mechanics, who sigh things even more. heck, i've seen, i've been in many a dealership or even at the local autozone or local, you
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know, o'reilly's and they're saying, oh, yeah, this is an issue we see all the time. no one really seems to take, take notice about it. you know the one thing that gm has done or is pledged to do is that it has a big customer call center now here in warren, michigan and now engineers are being directed to spend at least some time listening to customer complaint calls and kind of looking at that information. in fact gm is trying to get more of this customer complain information into the hands of their engineers earlier. but again, just a very hard, i guess, problem to overcome for some reason. that there again, there is this wealth of information but it just doesn't seem again, to filter up somehow. >> host: our next caller is also from chicago. bruce, good morning, republican line. >> caller: good morning, sir, how are you?
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i just -- >> host: great, thank you. >> caller: i was just wondering in bankruptcy, bankruptcy extinguishes liabilities but only liabilities that are disclosed and i was wondering if all of these liabilities, if gm knew they were there, when they, when they went into bankruptcy, if that liability is kept alive and if there would be any clawback against the sweetheart deal the unions got at the sake of the bondholders? >> guest: well, again this is an interesting question and you hit on what could be a big, big legal battle for gm. what did they know? did they know that this was out here? did executives really not know about it because it never got to them? if they did know, did they try and keep it or not report it at all because they knew the bankruptcy would wash them clean of that? so there will be some good legal arguments coming up, i'm sure,
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within the bankruptcy, i guess the bankruptcy workings to see if they might, the lawyers might be able to pop that latch back open and get in and really go after the current gm rather than dealing with this old gm that is already set up and already filed for bankruptcy. >> host: which comes back to the issue of cost. so two points -- >> from right now. >> host: immediately. i mention that because the recent editorial from the "new york times" points out it's a defective auto system and adding that the law needs to be changed. congress should give the safety agency power to levy bigger fines against automakers that fail to recall defective cars. under the current law the maximum fine for a failure to notify the regulator of a defect in timely manner, $35 million.
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the new york sometimes says that is pittance for a company like gm which made a profit of $3.8 billion last year. jeff bennett. >> guest: i think what you're going to see here, especially when this gets into subcommittee hearings and steps like that, they will grill gm and gm will have to step up and answer a lot of questions and gm will probably fire people and pay fines. yeah, there is a big question here on why nhtsa is not doing more, is not being given the resources to do more. they only investigate about 100 crash as year. and that is pretty small based on what goes on out there. but more importantly is that the car of today has many more electronics in it than it did years ago. so the nhtsa of today, must be much more different. we're not talking about, these aren't, you can no longer just go out and measure how far the vehicle skidded off the roadway or how the crash happened.
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you've got to look now at these internal, operations, these internally electronics, wiring, all of this stuff, has to be evaluated. and it just seems like nhtsa doesn't have those resources to do that. and then as, as others have pointed out, nhtsa really doesn't have the teeth that it should. really a $35 million fine for all these automakers, that make billions of dollars. so you he mo, yes -- you know, yes, you would have to see them being given more latitude to levy heavier fines to really kind of make a dent or send a message to these automakers. >> host: david joins us from kansas. good morning. >> caller: good morning. i would just like to start by telling you that i have experience in the automotive industry for 35 years. now, you know, a lot of customers have had -- caused problems to these cars. if you would notice, every car
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that has plate where you open up the door and has the serial number on the car and date that it was manufactured and the month, so that when there's a problem coming down the assembly line and they catch it on the assembly line they correct it. maybe some of those other cars had been sent on to the dealer. . .
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serviced for other problems, you know, the dealer doesn't really come across that until they are like wild you brought your vehicle in and we saw that there were these service bulletins issued, you know what you need to get this stuff. gryphon they have declared that they need to alert customers about yes i mean, these machines have a lot of problems. some small and some are big. and there are service bulletins
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-- welcome again to everyone. i know we have a few people that were not here when we started this morning and i'm happy to see that most of you have stated, and i can understand why. this segment of the conversation with the commissioner has been one of the traditional highlights of the three state foundation conference. we are really glad that you're here, commissioner o'reilly. you're the fourth commissioner to this conversation with me. and i confess -- i don't think you know this, but i asked chairman wheeler whether he would come and have the conversation before i ask you, and he said you know, frankly i'm a little bit afraid. why don't you get o'reilly appear. [laughter] >> so you're saying i'm the second fiddle. >> i am not saying that.
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that's not true. but i am hoping that he is listening to because i may try to get him back, may try to get him in the future. but make no mistake we are pleased that you are here. now we've got these very nice brochures here and it has your full bio in it, and i should say right at the outset, you've got one of the most extensive careers on the hill of anyone that we've had here before. very and herself, and especially in a increasingly responsible positions. so i'm going to skip through all of the particular stops along the way. but i know that you started i think in 1995; is that correct?
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>> 94, but yes in that timeframe. >> and you were still on the hill right before you were nominated and been confirmed as an fcc commissioner. so just tell our audience what your last position was that you held before you were confirmed, and then we are going to let them refer to the bio. >> before being confirmed in november of last year, i served as the policy director in the republican office for senator john cornyn. i've been there about three years or so into the predecessor for john kyl as well. >> okay. so just to ge get the time set n context, you were there during the drafting -- you were on the house side at the time of the 1996 communications act;
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correct? >> that's accurate, yes. >> and that's important, because in just a little bit i want to give to somget some questions ar own understanding of the acts. you had a birds eye view of the act. i'm going to start off with a softball question. were you watching any of the earlier proceedings on c-span this morning? >> i'm sorry to report i was tied up with a couple other meetings so i didn't get to watch the panel. >> no need for apology because that at least when i asked you this question we already know the answer. in today's "washington post," this morning in the crossword puzzle, number 69 down -- this is true -- the clue in the crossword puzzle is government regulator of radio and television.
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three letters. what do you think the answer is? >> i am a sudoku fan so i don't know anything about your crossword puzzle. [laughter] i joke. >> if you look up in the logo you see that we may have anticipated that with our little crossword puzzle, but i said this morning that i was happy to see that the clue wasn't the government regulator of the internet. that might have thrown more at this time. since you spent so much time on the hill again coming increasingly responsible positions but i understand not all of them have to do with communications policy and
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oversight i want to ask you based on your experience hell do you think about the relationship of the agency to congress and how that experience informs your own view of being a commissioner and at this point i am not wanting to get into any specific issue but thinking about it conceptually. >> before i begin to answer the question which i will do i want to thank you for the good work that you do. as you know i do read your work and it's helpful to me to have different perspectives i like to have different viewpoints for me and your work is very helpful and i think you. i should also say this is a beginning point i don't tend to wear glasses but i'm suffering miserably from allergies so they
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are also clouding my brain a little bit so i apologize in advance. but let me answer your question. there are three things i learned in observing the relationship between the congress and the fcc and i hope to take with me in my current job as commissioner. number one, implement the law. it is a creation of congress whose job is to implement the statute and that will be the front of my thinking. it doesn't only mean meeting statutory deadlines but also not overstepping our authority. number two, humility. it's not my job to tell congress what to do instead i will do what they tell me to do. number three, communication. the key to any successful relationship is communication so i will interact and continued to interact members of the house and senate in conversations and writing and their viewpoints and
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also their staff. it's important to keep talking to the staff and have that perspective, so have a pretty good handle and keep current with congressional intent. >> i want to ask you one more question about your experience in a generic fashion and then ask about section 706 which we talked about a lot earlier today because it is so important now and i want to get your perspective but before doing that, there is so much talk these days about the gridlock on, you know, on the hill and the congress can't get anything done. i confess sometimes from my perspective it's good that they are not getting something done if that's getting something done isn't a good thing but nevertheless there is a lot of discussion. you were there for a long time
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and i would like to know any thoughts you have on whether there has been some change in the way that the congress functions and if so, what that might be attributable and especially if you think that communications policy stands out one way or another just comment on that. >> not really. i don't think it's more partisan. i lived through the election into the revolution that followed and i also saw the majority over time and those are pretty partisan times but we still got things done. communication policy is a few issues. i expected the community t expee forward on the authorization extension is in the coming months and to meet their deadlines and that's going to move forward notwithstanding what is occurring in the congress. the real issue always comes down
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to the agenda and the priorities of the committees of jurisdiction. >> let's turn to section 706 because three months ago most people didn't know it existed or if they knew it existed certainly their views might have been different on what it means that you were there on the hill at the time the act was drafted so i would like you to give us your views concerning the way that you think the court interpreted it and the way that is now the fcc is interpreting section 706. >> happy to do so if you have a couple minutes. >> i have the room for a long time so take your time. >> for those of you that have not focused on section 706 as they take wetake a moment to ext
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is all about. it's part of the deregulatory act congress inserted a provision known as section 706. it has to components. the first contains language to encourage broadband deployment and tell the states broadband deployment is a relatively good thing. second, section 706 b. requires a study by the commission to determine broadband availability combined with actions if it comes back finding is lacking. at best the congress intended it would be treated with congressional findings. and at the worst, the absolute worst it would be that it would meet the further deregulatory measures. now, that is not exactly how
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it'itplayed out but let me expln why and where we are. and part of it is because as highlighted extensively i was there in the 96 act. was one of the people in the room i had a fewer gray hairs at the time but i know what the deals meant and they stuck with me over time and when i talk to people that worked in the act i'm not aware of anybody suggesting that this is what 706 was intended to be and even if people did, which i did and belief, it would set in motion further deregulation of the industry. there was no intention to provide extra regulatory authority. even the fcc didn't believe it had this authority until it ran out of other options in 2010 the dc circuit rejected every shred of authority the commission put forth to regulate the net
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neutrality through the post next neutrality rules and in a last ditch effort to the commission decided to reinterpret section 706 and then pull the trigger on 706 b.. i find that to be troubling and this is why you would have to have some wild assumptions to be leave the interpretation. number one, you have to be leave that for republican congress with a mandate inserted a very vague language in the broadband to the fcc but then didn't tell a soul. it didn't show up in the writings are the summary. you have to be leave the conference committee intended to codify section 706 outside of the act thereby separating it from the act title v but somehow
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we still expected it to be enforced. three, you would have to assume the congressional committee who went on an extensive review afterwards and even proposed legislation to reign it in from the authorization legislation that they went through the effort and at the same time provided a secret loophole to the commission to regulate. you have to believe in the congress is having an extensive debate on over ability to regulate or the ability to give authority on the net neutrality that at the same time they had already given the commission of 40. you'd have to believe when congress legislated in the space and on certain provider uncertay narrow instances relating to mostly public safety you would have to believe they went through that process and then it
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didn't matter they had already given complete authority in that space under section 706. it's mind boggling to be leave those assumptions and many more are true to suspend rational thoughts to get that point and the truth is that congress did not provide the authority to the commission as it seems to be leave. it's not the opposite. it's not that the authority is all-encompassing and that's why i'm so disturbed and troubled by the actions in this space and the courts reasoned decisions. there's a lot to think about. i didn't know you were going to get up to six. but each one seemed in my perspective very convincing. i like to hope they were all captured properly with your
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microphone there. one more point i don't know if anyone in the audience had this but i thought your tongue slipped and use it to this interpretation would give the commission further deregulatory authority but obviously, your view is that under the court's decision and the way the fcc is interpreting it is went to have more extensive regulatory authority that it was never intended to have. >> i believe it does not have the authority and i made the case in the numerous settings. i said even if he were to accept that they have this authority it was intended to be deregulatory. we may come back to this but i
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want to cover some other ground. and obviously the court's decision affects but the congress may do when it considers a new act presumably and we will talk about that as well. but remember the handle is hash tag sncnof and we will reserve time for a few questions from the audience. now, i want to switch gears for a moment to talk about how the fcc updates as an institution and, you know, the focus on the process reform and the house of representatives has asked to by voice vote a process reform bill that came out of the house commerce committee. the commission has a task force or some form of group looking at making recommendations and it's
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issued its first report on concerning reforming various aspects of the commission processes. but one issue of the process is that in the news a lot about just the last couple of days that i want to ask you about is delegation of authority. and i will ask the commissioner clyburn about that this morning and of course she has the perspective of being a former acting chair in that position and as a commissioner you have yet to obtain that status so far. but without knowing what she said, i want to ask you from your perspective to comment on the appropriateness of delegation of authority whether it should be used or not used and in particular if you can address the concerns that you
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can address head on. >> i'm relatively new to the commission. so there are only so many experiences i have been able to express. but some concerns regarding the use of delegation recently i've been troubled by the scope of the authority and the items that has been decided by the bureau and the commission staff and it's not that i have trouble with the staff. they are great and i've had an opportunity to meet with them and i appreciate their good work. the difficulty is uncomfortable voting on whatever the issue may be and i will do so in a quick fashion. so, to me if it is not about how quickly something gets done, if that is not the issue because i'm ready to vote, then what is it about and -- >> that was excited this morning when i asked for one of the
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decisions and the ambassador made mention of the same thing so i just throw that out. >> it shouldn't be a concern on my front. i come from an institution where they voted all the time and you have to defend your votes going forward, so i'm comfortable doing that. i don't have a difficulty voting. i'm happy to do so in a quick fashion and so if it's not about speed than i am not sure what it's about and i'm not sure why some of those items couldn't come up to the commission level. >> staying for a moment on the process reform and i appreciate you sitting on the commission for four months now, but i want to ask you because of the focus on this and putting aside the delegation of authority, you know that report that the staff issued a couple weeks ago had a gazillion items in there. there were a whole bunch of them
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and in my view, some were fairly inconsequential and others may have even been misguided. based on your observation of the commission from the hill are there other aspects of reforming the way the commission does business that you would like to see changed? >> we have a process for reviewing the current process. so i want to see that materialized or some concerns on certain parts and i want to review those closer. but i've only been there for such a time i can't comment much on the space but i see the delegations in my concerns right now. >> switching the gears and moving away from the process, i want to talk about some of the substantive matters before the commission. but before talking specifically
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about any line or the other if we can think of it this way initially i want to ask about your regulatory philosophy and what i mean by that foundation, we be spared ourselves as having a free-market oriented perspective and when we say that, we don't mean that the data isn't important and you don't have to look at it in a particular proceeding or marketplace, but we do have a philosophical disposition or perspective, so i want to ask you how do you discard your own regulatory philosophy and i will just combine a couple things together. is there anyone you look to, past or present to model your self after as a regulator or someone that has been particularly influential in shaping your own thinking about your approach to the regulation?
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>> i start with the premise that championing economic freedom can be the guiding principle to oversee the communications industry and before regulating i want to look at the factors. number one does the commission have thhas the authority and one confines. number two when it does act what it should be based upon is is there evidence of market failure and harm to consumers and a solution that they can propose that can actually be implemented? number three, -- excuse me. sorry. the allergies i mentioned to you before. three is does the commission set for its recommendations to the tailored to the set of providers and services or does it try to be expansive in the universe? and number four, do the benefits outweigh the cost of the regulations and let's face the
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facts the costs are passed on in one fashion or another. i don't have a favorite regulator and my views don't come from anyone in particular, but i suggest there are a collection of ideas from those members of congress life worked for over the years. ..
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>> we can talk about that then or,f need be, you're welcome to bring them in now. but, because if we went around this room and probably over at the commission, of course, everyone proclaims that generally they prefer competition, and when markets are competitive, then they, you know, regulation may not be necessary and sort of broad terms. but how do you go about assessing when a market is competitive or not or whether there's a market failure requiring the commission to intervene in some way? >> sure. so i don't want to get too far down this road, but let me provide a general approach. how we define markets is very important. and this should be driven by byy that. i worry that the commission sometimes p isn't driven by day that, and that causes me
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concerns. so i look to how many competitors are in the marketplace, whether the competitors are offering services comparable in terms of price, in terms of scope, in terms of reach. are there other market participants that may be substitutes for existing providers, and are they disciplined pricing or providing new, innovative functions and features that make the other market participants react. >> okay. so you've got those things you look at that you put out on the table, and then, you know, you are responsible or you oversee certain markets that we've been talking about all morning here at, you know, the broadband marketplace, we talked about, you know, the video marketplace, talked a lot about the wireless marketplace. so my question is really and i'm
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not asking you to comment on any particular proceeding really, unless you want to. we may get to that. but just talk about, you know, these marketplaces which you've observed for years and years and years and where you think that they now stand in terms of their competitiveness or not. because as you know, people have different views, and some of your fellow commissioners probably have different views about these things. >> sure. so as i previously said, i think how you define a market is really important. and i recognize that it's challenging. and i may be open to a broader definition than some. but i start with the premise that -- oh, sorry. i'm having -- [laughter]
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i start with the premise that technology is converging, and markets are blurring. that consumers recognize this, and at any given moment your smartphone could fall in the category of wireless device, it could be a internet data and broadband device, or it could be a video device. and there are blurring lines between cable and telco. we're also seeing the same thing this wi-fi. we're seeing the same thing and shouldn't discount satellite and broadcast. they play primarily in the video marketplace today, but we don't know where they're going to go in the future. consumers are readily jumping wean -- between wireless and wireline delivery meds today -- methods today. >> okay. and i think following on with that, commissioner o'rielly, implicit in what you've just said or maybe explicit is the way that services are converging
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in what we call the digital world, and, you know, the notion that the competition is often among platforms that are offering, you know, packages of services and whatever. so, and that brings me to the ip transition proceeding. for our c-span audience, that ip stands for internet protocol transition, and that's another way of saying the services have moved, in my view, quite rapidly. although it's been occurring for a long time, from the analog world to the digital world in which, as the old saying goes, a pit is a bit -- a bit is a bit is a bit. so what is your view of currently where the commission stands on the ip transition
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proceeding? i know it was, took about 13 or 14 months or whatever between when at&t filed a petition asking to initiate the proceeding and further movement. on the proceeding. and now the commission is embarking upon trials. so, you know, if you can just be as specific as you can about where you think things stand and where they would like, where you would like to see them go and in what -- >> sure. so i can't comment on why anything was delayed under previous commission. i've only been at the commission for four months. but chairman wheeler has made this a priority, and i commend him for doing so. i'm supportive of the trials, and we were able to quickly put together proceeding to consider rules that we are able to enact earlier this month to consider ip trials. now, i can't comment too much this the space because we have -- in the space because we have two proposals before us for service-based trials. i will say i was concerned and even more so regarding the
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incorporation of the rural broadband experiments as part of this proceeding. >> and you explain why? >> well, i worry two parts. one, that those experiments as they're defined may zap dollars from other funding for usf, and i worry about how do those issues fit together, how do the experiments fit together with the overall usf funding streams that we're already having. what are we -- is there a possibility for duplication, there's a possibility we're going to duplicate with what the usda is doing. so i worry about a number of fronts on that, and i'm going to be inquisitive on that going forward. >> okay. now, i want to turn to spectrum. >> sure. >> for a moment. when steve larjent was here the this morning on the first panel,
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the first question i asked, what is the single most priority the commission should have. you can imagine trying to limit those guys to singlemost, but we did that. and in his case he says when he goes out to eat and orders, you know, his meal and the -- can he's asked what he wants, he says spectrum, spectrum, spectrum. [laughter] so we all know how important spectrum is. so you have this incentive auction proceeding on the table coming up. it's, obviously, important. it's got a number of dimensions to it. and, i mean, one of them is raising revenue, it's also intended to transpose spectrum -- what's the right word i'm searching for when the, that's used so much i now.
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when you're moving -- repurpose. repurpose, actually, was -- repurpose spectrum from, you know, one use to another, another use, you know? and everybody knows it's important. so i want to ask you this: your fashioning rules, there are a lot of intricacies to them that we could talk about, but some of them are much more intricate than others, the one i want to ask you about first relates to whether in constructing the bidding rules there ought to be limits on the participation by eligible bidders. but also in talking about that, you can maybe address how that question relates to the existence or not of a spectrum capover -- cap or a spectrum screen that exists. but you're aware that there are a lot of people arguing that in order for there to be fair
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competition or legitimate competition or whatever that the auction has to be structured in a particular way. comment on that, please. >> so i pluckily stated that -- publicly stated that i'm not in favor of caps or limits, certainly as it relates to the sniff auction or in general. let me take it in the general case more to start with, and welcome drill down. so in general, i haven't been in favor of caps. the commission has a case-by-case market analysis that it uses that has been pretty successful in insuring competition and protection of consumers and their needs. in terms of the specifics, this relates to the spectrum screen. if there are particular problems with the spectrum screen, i'm open to see what they may be, and thaw may be fixable. people have articulated their concerns regarding warehousing or foreclosing competition as it relates to spectrum, and i would argue that the solution is not spectrum caps, that the solution
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is strict buildout requirements and the willingness to yank licenses if necessary. >> to yank licenses -- >> who do not meet the buildout requirements. >> okay. what about this question of licensed spectrum versus unlicensed spectrum? >> oh, sure. >> that came up earlier. and, i mean, to me, it seems like in one dimension it's an engineer -- a lot of it involves an engineering sort of issue, but there may be questions, again, of ill soft call perspective -- philosophical perspective in terms of having property rights to the spectrum or not. how do you approach this looking at the question of licensed versus unlicensed spectrum? >> so for the foreseeable future we're going to have both exclusive license bands and bands that are shared. i tend to be more in favor of clearing bands and inclusive licensing, but i'm not foreclosing any options as it
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relates to spectrum sharing. in fact, if you look, spectrum sharing is working today, every day for consumers in terms of wi-fi and unlicensed spectrum, and i'm the biggest fan of that. and i find that the wi-fi providers are some of the most truly innovative and entrepreneurial services that we can find in the marketplace. and, therefore, sorry, and therefore, i'm in favor of what they're able to do. there's one thing that we'll certainly have to recognize, and that is that the federal government is going to need to reduce its spectrum holdings and do so in a quick manner. >> okay. so we're going to, just to let the audience know, i'm going to ask you two or three more questions, but it's always been our policy here, at least our goal to give the audience a chance to ask a few questions. so i'm going to, we'll go through these, and then we'll see whether we have a couple audience questions. >> sounds good to me.
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>> it hasn't been too bad so far, right? >> it's all good. >> okay. so i want to talk about maybe just the video regulation era -- area. now, there's this proposed merger between comcast and time warner cable that is in the space. you may tell me that you can't decide right now sitting here what you think ought to be done this that perrier -- in that merger. and, you know, i'm not going to press you on that. but here's what i want to ask you, just talk about how you think about the video market now and now it's changed. i depress the cable act of '92 was adopted just a couple years before you arrived on the hill. you, obviously, are familiar with that. you know, i happen to have been around at that time too. you know, the market has changed
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a lot since then, i would suggest, and that um -- implies perhaps there ought to be regulatory changings. others say not. what do you say about the video marketplace today? >> so i will agree with the first part of your premise, and i don't talk about any particular merger that we may or may not have, so i keep myself distanced in that. but in terms of the video marketplace and as you highlight the 1992 cable act, i don't think anybody can make the claim that the '92 cable act is about promoting free market. it wasn't, you know? and it's premised on a different belief, rightly or wrongly, that at the time cable service providers were monopolies. a lot has changed since 1992, and the market has changed significantly. to the heart of your question, you know, there's a number of rules that the fcc has that come from a statute, and there's not much that, you know, it's not my job to change those. that's the job for the building i used the work in. in those instances where we
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don't need congressional action to remove barriers, i'm fully open and willing to look at those situations and remove barriers that are no longer necessary to reflect the current marketplace that we live in for the video providers. case in point, sports blackout. i'm in favor of getting rid of it. >> you know, i was thinking as you were responding, and i understand, of course, fully what you're saying about the congress and some of these things existing in the statute or not. but, you know -- and you may or may not agree, but i just want you to be aware of it. at the free state foundation, you know, for many, many years we've argued that in light of these changes in the marketplace that some of these regulations and laws in place, for example, like must carry, for example, that those actually raise very serious constitutional issues
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under the first amendment and that the fcc especially ought to be sensitive to first amendment issues. and i'm just wondering whether, you know, you agree with that and whether as you think about these issues in the future, do you also -- i mean, because of your hill experience i know the first thing you're doing is looking at what the statute says, i understand. but do you try and think about what the constitution says in this video regulation area? >> well, absolutely. when i was sworn in, i swore a duty to protect and defend the constitution of the united states. so i am fully aware and a big, big supporter of the first amendment. one of the biggest proponents of the first amendment you're going to find. so i'm very sensitive to those issues. but in some instances, in must carry universe that's something that's in statute, and there's not much i can do about it
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absent congress talking action. >> right. by the way, as you know, brett kavanaugh on the d.c. circuit has written some what i think are very good decisions in terms of bringing the first amendment consideration into it. so i appreciate that. so i just want to go back for one moment to the fcc transaction review process. i understand you're not commenting on the comcast merger, but just in general because this issue's been around, you know, for years and years, it's been my view expressed really for over a decade that the fcc quite often tends to, you know, i'll just say it this way, tends to abuse the authority it has to review transactions by imposing
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conditions that are unrelated to mergers. and it's able to do that quite easily because the public interest standard under which it reviews these transactions is, you know, so inherently ambiguous that it's easy to stretch. and, you know, again from our perspective, it often seems to me that these, quote, voluntary commissions, excuse me, commitments that are offered up by the parties awaiting the commission's action on a merger, they come at the last moment. it's frequently the case that no one can comment on those the they wanted to, and it seems to me like this process can be a bit unseemly for the way it's been conducted. so i'd like to ask you to just comment on the process. >> so let me, let me answer it the -- this way.
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i am of the mindset that the review process should be confined to that which is before the commission in the production and what are the issues at hand. i will be reluctant to be favorable to situations on offside deals or offside commitments that have nothing to do with the underlying merger that's being reviewed or any concerns that may be raised accordingly. so those type of situations are not, are not things that are going to be swawing my decision one way or the other. in terms of your timing part of the equation, i'm in favor of and have articulated that the commission should seek to get all information, as much information as possible on the early part of the equation, in the early part of the shot clock, in the early part of the process rather than waiting for down the road. so i'm comfortable collecting the information early and staying to the market-specific instances that may raise questions. >> okay. i want to end our part of the
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conversation by going back to your hill experience where we began, because as you know, the house commerce committee announced a few months ago that it's initiating a process to review and, quote, update the communications act. it shied away, wants to shy away from using, i think, the word "rewrite." identify actually expressed my -- i've actually expressed my own view that there ought to be a clean slate approach and really a rewrite of the act and not tinkering around the edges. but people really came to hear your views and not mine. so i want you to bring to bear your hill experience and just tell us, you know, don't -- probably can't write the act here, but -- [laughter] you know, be with specific as
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you can within a limited time and tell us how you think about approaching a new communications act and if you think there ought to be a new communications act at all. >> so as i previously stated, i bristle at the thought of telling congress what to do, so i'm reluctant to try and provide unsolicited advice to their good work. there are fine men and women that work really hard as well as their staff, so i leave them to be in terms of this process. i stand ready to help them in the any way i can help them if asked. but i thought i might be able to provide some light in this area and share with you a couple lessons learned over the years from my experience and things that i took with me not only in this current job, but also in my years in the senate as i took to new bosses in the senate. one, i would suggest that you should prepare to expect abuse. when writing communications provisions, think of the
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absolute worst way and broadened way that the provision can be interpreted, and that will be working against your interests. and then work backwards. so expect people are going to misinterpret and abuse your provision and then work backwards with. i can't tell you the countless times where a federal agency misinterpreted something that i worked on. it's extremely frustrating. and, you know, it's frustrating, extremely frustrating for staff, but it's even more frustrating for members. number two, we should whenever possible expressly state what authority the commission has and what authority it doesn't have. and you can put that in the statute itself, in the provisions themself. and i worked that way, and i did that when i was in the senate. i would put in exactly what i expected the fcc to do and exactly what i didn't want them to do. you shouldn't leave it to chance. and third is to, if possible,
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leave out extraneous provisions. i know in the art of legislating it sometimes is helpful to add benign provisions that may be for a particular member or a particular group, but those are the ones that often come back to haunt you. they can be acting like ticking time bombs waiting to explode in a misguided court or an activist agency. >> you know, i'm not under the constraint that you are about giving advice to congress, and so i've given them some, and we filed a nice paper. in thinking about it, i mean, i was just thinking when i was listening to you, you know, the 1996 act, as you know, i think it passed the house almost unanimously. is that right? >> well, we haded a number of highly contentious amendments on the floor, and some of them we won, and some of them we lost. >> but eventually -- >> it was very overwhelming. >> i think in the senate i recall it was like 96-4, 98-2.
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>> right. >> and you know, and so in one sense that would, there was a consensus. you know, of course everyone on the hill, congressmen and women talk about, you know, we want the parties to come together in consensus, and, you know, we want them to reach an agreement. you know, i appreciate that sentiment, and i know it makes things easier when that happens, but, you know, my own view, commissioner o'rielly, when eventually this new act is passed -- and i think it will be at some point -- if it happens to pass the house near unanimously and the senate 98-2, it probably won't get us where it needs, where it needs to be in terms of a new communications policy. think i might be right about that in. >> well, it depends on your viewpoint, i imagine. it may not -- with such agreement, it may not be exactly what you may prescribe, but it,
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you know, members of the house and senate have a difficult job, and they have to, they have to contemplate what needs to be done with also what can be done versus what are the objections to particular provisions. and so they do that unique balance every day in many different forms, but particularly in communications policy where they have to determine, you know, how much can they add and how much has to stay out because of internal or external objection toes. and so -- objections. so it's a delicate balance. >> okay. we're going to turn to questions. we have time for just a couple questions. and while we're doing that, i just want to make it really clear. mike, when i was joking earlier about having asked chairman wheeler to come and do this, that was a joke because as you probably recall, i pestered you
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even before you were confirmed by the senate. i said that i wanted you to come to this conference and do this conversation, and you might have been saying, you know, this guy's really getting ahead of himself. but i, you know, i did do that. and i'm glad that you, that it worked out. >> i'm so pleased to be here. this has been very beneficial to me not only to think about some of the ideas and the work that free state does, but it's just helpful for me. and the good part is hi good friend, the chairman, will take it in stride. >> right. okay. do we have a question? going to go to gary right here. >> thank you. and by the way, the scrabble pieces up there have looked to me like a court gavel all day, and i don't know why we don't talk about the courts as part of the communications future. but more pertinently, mr. o'reilly, some of the
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panelists talked about the fcc's role as antitrust, antitrust, antitrust in the time warner/comcast situation. also, throughout the first panel of the day they talked about dedecision, competition, competition. and how do you see any of those fitting together in this new landscape that is taking shape as part of rewrite and part of your own obligation to look at companies outside of the field, google, a name that hasn't been mentioned much today, intel, qualcomm, so many of the companies who are players in a real different kind of landscape? >> so you raised a number of issues that, hopefully, i've said that i can't talk about. mergers and a number of things, rewrite. but i will, let me answer the question slightly this way and say i'm extremely troubled by the use of section 706, as i've previously mentioned and talked about at length. i'm extremely troubled for those edge providers who may now be captured under the fcc's authority.
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i worry about them. they don't spend every day following the commission. i worry about these smartphone apps, microsoft office online, i worry about google search, i worry about netflix streaming videos and smarthome apps, devices. i worry that those folks who don't spend time following the ada commission may be wrapped into the commission's jurisdiction depending on the reading of the court opinion. and so that causes me deep concern going forward. >> okay. another question? okay. i'm going to call on barron. why don't you wait for that microphone to come over here. and then, barron, before you start, as soon as the commissioner answers this question, then we're going to immediately commissioner old hawzen is here from the federal trade commission. she's going to deliver the keynote address, talk a lot about the internet and who should regulate it, if anyone,
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and how. so i'm going to turn to that when we finish this question. and so just make it a question here, not a long statement. >> so i share -- i share both your concerns about 706 and your analysis as to why the court got it wrong as a statutory matter, why chevron shouldn't have been extended there, but what do you think the fcc should do about it? it seems to me the fcc, there isn't much they can do because even if you were chairman, even if the fcc reinterpreted 706 and said it wasn't a -- [inaudible] authority, that would always be subject to re-re- re-re-reinterpretation in the future, and it would reextend chevron. so what would you do, and specifically would you suggest to congress that maybe congress should fix this problem notwithstanding your general concern about giving advice to congress? >> so i understand the point you make.
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let me answer it this way: again, i don't want to provide advice to congress or any thoughts, but that would be one way to address the issue. we still have many more rounds to go, you know? this is one court, very important court, very good insight to the issue even if i disagree with it. but it is not the final court in the land, and we may see the court decision challenged in a different setting at a different time period. so we don't know exactly, this isn't the final say in the matter. and it's possible that it may be addressed by the legislative body, and i'd have to defer to them on that. but i understand the point that you make, that even if the commission defers doing something in the space and decides not to regulate broadband providers -- which i hope they will not do -- then the authority may still be lingering out there. and that's something we're going to have to deal with going forward, legitimate point you raise. >> okay. well, i want to thank you again for coming. i hope you'll come back to many more free state foundation
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conferences and join us, and i'd like for everyone in the audience to join me in thanks commissioner o'rielly. [applause] thank you, mike. thanks a lot. >> thank you. >> and you'll be back, i hope. good. [inaudible conversations] [inaudible conversations]
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>> okay. well, again, thanks to commissioner o'rielly. and now we're going to turn to our closing keynote address, and i'm particularly pleased that commissioner maureen o'reilly is here to deliver that, because a lot of the -- i'm sorry, what did i -- commissioner. i'm sorry. well, i did start at -- >> [inaudible] >> i started at 9:00, so my apologies to the commissioner. sincerely. but i'm pleased that you're with us, because as much of the discussion today -- and i'm not going to preempt what you're going to say, but i know it has to do with, you know, either pre or post the verizon decision, who should regulate the internet, if anyone, congress,
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ftc, you know, fcc. so in order not to make any more mistakes on your bio, we have -- everyone here has your full biography here in our brochure. i'm not going to go over that now with your permission, but i just want to thank you again for being here and, please, welcome commissioner maureen o' housen, please. [applause] >> well, thank you, randy, for that nice welcome, and thanks to the free state foundation for inviting me to speak today. randy, you and your team do a great job in advocating an important technology policy issues, and i'm honored to participate in today's thoughtful discussion on the future of communications regulation. at the federal trade commission,
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protecting consumers and competition on the internet is a substantial and growing part of our work. and i have some specific ideas on the ftc's future role. after introducing the work of the ftc, i'll make three points today. first, to protect consumers effectively while promoting innovation, regulators must embrace regulatory humanity and focus on consumer harm. next, the recent verizon decision is an example of the difficulties of using prescriptive ex-antirulemaking to regulate a dynamic industry. the greek myth of -- [inaudible] and his iron bed is instructive here as i i will explain further if my remarks. and then finally, reformers should look to the ftc's successful evolving approach to internet-related issues including its ex-postenforcement of basic competition and consumer protection rules.
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so first a little background on the federal trade commission. the ftc's mission is, to quote: prevent business practices that are anticompetitive or deceptive or unfair to consumers, to enhance informed consumer choice and public understanding of the competitive process and to accomplish these missions without unduly burdening legitimate business activity, end quote. for a century the ftc has pursued this commission under section five of the ftc act which authorizes the commission to prevent unfair meds of competition and unfair or deceptive acts or practices. these dual competition and consumer protection mandates are intentional. competition and consumer protection laws are complementary tools, and both help to promote vibrant competition that benefits consumers. or vibrant markets that benefit consumers. congress charged the ftc with carrying out this competition and consumerte

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